North Carolina — Personal Income Tax

North Carolina imposes a personal income tax on residents, part-year residents, and certain nonresidents. Filing requirements depend on residency status, the amount of gross income, and the source of that income.

## Residents

Every North Carolina resident must file a return if gross income under the Internal Revenue Code exceeds the standard deduction amount provided in N.C. Gen. Stat. § 105-153.5(a)(1). Source: N.C. Gen. Stat. § 105-153.8(a)(1)

For tax year 2025, the filing threshold for residents is $12,750 for single filers, $25,500 for married filing jointly or surviving spouse, and $12,750 for married filing separately (if the spouse does not itemize; $0 if the spouse does itemize). Source: North Carolina Department of Revenue – Individual Income Filing Requirements

Residents are taxed on all income, regardless of where it is earned. Source: North Carolina Department of Revenue – Individual Income Filing Requirements

## Nonresidents

Every nonresident individual must file if both of the following apply: (a) the individual receives gross income derived from North Carolina sources—specifically income attributable to ownership of any interest in real or tangible personal property in North Carolina, income derived from a business, trade, profession, or occupation carried on in North Carolina, or income derived from gambling activities in North Carolina; and (b) the individual has gross income under the Code that exceeds the applicable standard deduction amount. Source: N.C. Gen. Stat. § 105-153.8(a)(2)

An exception exists for nonresident businesses or employees who derive income solely from disaster-related work during a disaster response period at the request of a critical infrastructure company, under N.C. Gen. Stat. § 166A-19.70A. Source: N.C. Gen. Stat. § 105-153.8(a)(2)

Nonresidents and part-year residents must complete Form D-400 Schedule PN to determine the percentage of total gross income that is subject to North Carolina tax. Source: North Carolina Department of Revenue – Individual Income Filing Requirements

## Part-Year Residents

A part-year resident must file if the individual received income while a North Carolina resident, or received income while a nonresident that was attributable to ownership of any interest in real or tangible personal property in North Carolina, derived from a business, trade, profession, or occupation carried on in North Carolina, or derived from gambling activities in North Carolina, and total gross income exceeds the amount shown in the Filing Requirements Chart for the individual's filing status. Source: North Carolina Department of Revenue – Individual Income Filing Requirements

## Joint Filing Requirements

Two lawfully married individuals who are required to file an income tax return and whose adjusted gross income is determined on a joint federal return must file a joint North Carolina income tax return. Source: N.C. Gen. Stat. § 105-153.8(e)

If two married individuals file a joint federal return but only one is required to file a North Carolina return, that individual may file either jointly or separately. Source: N.C. Gen. Stat. § 105-153.8(f)

North Carolina imposes a flat-rate personal income tax on the North Carolina taxable income of every individual. For taxable years beginning in 2025, the rate is 4.25%. For taxable years beginning after 2025, the rate is 3.99%. The statute also provides for potential rate reduction triggers based on General Fund revenue thresholds.

Source: N.C. Gen. Stat. § 105-153.7

North Carolina defines "resident" using a two-prong test: an individual is a resident if either (1) domiciled in North Carolina at any time during the taxable year, or (2) residing in North Carolina during the taxable year for other than a temporary or transitory purpose. Either prong is sufficient to establish residency for the full taxable year.

Source: N.C. Gen. Stat. § 105-153.3(15)

## Domicile Prong

Domicile means the place where an individual has a true, fixed permanent home and principal establishment, and to which place, whenever absent, the individual has the intention of returning. An individual can have only one domicile at a time. Once a domicile is established, it is not legally abandoned until a new one is established. A mere intent or desire to change domicile is not enough; voluntary and positive action must be taken.

Source: 17 NCAC 06B .3901(a)

The regulation identifies sixteen factors to be considered in determining legal residence, including: place of birth; voter registration; vehicle registration and driver's license location; location of financial accounts, safe deposit boxes, and brokerage accounts; claimed state of residence on federal tax returns; location of real property owned and occupancy pattern; location of business interests; jurisdiction where professional licenses are held; membership in churches, clubs, and civic organizations; location of physicians, attorneys, accountants, and other service providers; location of family members; attendance of taxpayer or children at state-supported colleges or universities on a residence basis with lower tuition; location of everyday "hometown" living activities such as grocery shopping, haircuts, and dry cleaning; and utility usage.

Source: 17 NCAC 06B .3901(b)

## 183-Day Presumption

In the absence of convincing proof to the contrary, an individual who is present within North Carolina for more than 183 days during the taxable year is presumed to be a resident. However, the absence of an individual from the state for more than 183 days raises no presumption that the individual is not a resident. This is a one-way presumption: presence creates a rebuttable presumption of residency; absence does not create a presumption of nonresidency.

Source: N.C. Gen. Stat. § 105-153.3(15)

## Change of Residence During the Year

A resident who removes from North Carolina during a taxable year is considered a resident until the individual has both (1) established a definite domicile elsewhere and (2) abandoned any domicile in this state. Both conditions must be satisfied; establishing a new domicile elsewhere is necessary but not sufficient if the North Carolina domicile has not been abandoned.

Source: N.C. Gen. Stat. § 105-153.3(15)

## Marriage and Residency

The fact of marriage does not raise any presumption as to domicile or residence. Each spouse's residency is determined independently under the statutory test.

Source: N.C. Gen. Stat. § 105-153.3(15)

## Military Service

A legal resident of North Carolina serving in the United States Armed Forces is liable for North Carolina income tax whether stationed in this state or elsewhere. An individual who enters military service while a North Carolina resident is presumed to remain a North Carolina resident for income tax purposes. Residency is not abandoned until residency is established elsewhere, and to change residency an individual in military service must not only be present in the new location with the intention of making it a new domicile, but must also factually establish that the individual has done so.

Source: 17 NCAC 06B .3901(d)

For an individual who is a resident of North Carolina, "North Carolina taxable income" means the taxpayer's adjusted gross income under the Internal Revenue Code as modified in N.C. Gen. Stat. §§ 105-153.5 and 105-153.6. North Carolina does not calculate taxable income from scratch; it begins with federal AGI and applies state-specific additions, deductions, and other adjustments set forth in those two statutes.

Source: N.C. Gen. Stat. § 105-153.4(a)

Individual income tax returns in North Carolina are due on or before the fifteenth day of the fourth month following the close of the taxable year. For calendar-year taxpayers, the deadline is April 15. Nonresident aliens affected by IRC section 6072(c) have until the fifteenth day of the sixth month following the close of the taxable year.

Source: N.C. Gen. Stat. § 105-155

In calculating North Carolina taxable income, a taxpayer may deduct from adjusted gross income either the standard deduction provided by statute or the itemized deduction amount. The taxpayer chooses whichever method produces the lower tax liability; both methods cannot be claimed simultaneously.

Source: N.C. Gen. Stat. § 105-153.5(a)

## Standard Deduction Amounts by Filing Status

The standard deduction amount for North Carolina personal income tax is set by statute and is not indexed for inflation. The amounts are fixed by legislative enactment and remain constant unless amended by the General Assembly.

For taxpayers eligible for a standard deduction under section 63 of the Internal Revenue Code, the North Carolina standard deduction amounts are:

• Single: $12,750
• Married, filing jointly: $25,500
• Married, filing separately: $12,750
• Head of household: $19,125
• Qualifying surviving spouse: $25,500

Source: N.C. Gen. Stat. § 105-153.5(a)(1)

## Eligibility — Federal Linkage

The standard deduction amount is zero for a person who is not eligible for a standard deduction under section 63 of the Internal Revenue Code. This means that North Carolina follows federal rules for determining who may claim a standard deduction. A taxpayer ineligible under federal law — for example, a married individual filing separately whose spouse itemizes deductions — receives no North Carolina standard deduction and must itemize if claiming any deduction.

Source: N.C. Gen. Stat. § 105-153.5(a)(1)

## Relationship to Federal Standard Deduction

North Carolina's standard deduction amounts are state-specific and not tied to the federal standard deduction. The federal standard deduction for 2025 is substantially higher than North Carolina's ($15,000 for single filers and $30,000 for married filing jointly under current federal law as of early 2025), but North Carolina taxpayers use the North Carolina statutory amounts shown above when calculating North Carolina taxable income, regardless of the federal amounts.

## Itemized Deduction Alternative

A taxpayer who does not claim the standard deduction may instead claim the itemized deduction amount allowed under N.C. Gen. Stat. § 105-153.5(a)(2). North Carolina itemized deductions are computed separately from federal itemized deductions and include specific categories such as mortgage interest, real estate taxes, and medical and dental expenses, subject to state-specific limitations and adjustments. The itemized deduction amount is not subject to the overall limitation on itemized deductions under section 68 of the Code.

Source: N.C. Gen. Stat. § 105-153.5(a)(2)

## Historical Context — Current Amounts Effective 2019

The standard deduction amounts listed above ($12,750 / $25,500 / $19,125) have been in effect for taxable years beginning on or after January 1, 2019. Prior to 2019, North Carolina had lower standard deduction amounts; the 2019 increase represented a significant expansion of the standard deduction as part of broader individual income tax reforms enacted by the General Assembly in the prior years.

Source: N.C. Gen. Stat. § 105-153.5(a)(1)

## Married Filing Separately — Special Considerations

When married individuals file separately, each spouse must use the same method of claiming deductions — both must take the standard deduction, or both must itemize. If one spouse itemizes on their North Carolina return, the other spouse's standard deduction amount is zero, forcing that spouse to itemize as well.

Source: N.C. Gen. Stat. § 105-153.5(a)(1)

## Application in Filing-Threshold Determination

The standard deduction amounts serve a second function: they determine who must file a North Carolina personal income tax return. Under N.C. Gen. Stat. § 105-153.8(a)(1), every resident who has gross income under the Code that exceeds the standard deduction amount must file a return. For example, a single resident with gross income of $12,800 in 2025 must file because that amount exceeds the $12,750 standard deduction; a single resident with gross income of $12,700 is not required to file (though they may choose to file to claim a refund of withholding).

Source: N.C. Gen. Stat. § 105-153.8(a)(1)